France’s President, Emmanuel Macron, gets AI. He is saying in essence, unless Europe competes at a much higher level in AI it will end up a colony of either the US or China. In the old world of bilateral trade the doors were open for the US to swamp Europe with Google, Microsoft, Netflix and Disney, but now Trump has binned all that cooperation, digital services risk weaponisation or rather the weaponisation is suddenly in focus. Any country who wants to be sovereign has to be able to resist software sanctions, restrictions or weaponisation. This is why there is no Google in China, or Facebook etc and why China has a government policy to sluff of Microsoft as soon as possible.
The US ‘rugged’ the world when it locked down Anthropic’s latest AI. That sent a huge negative message. In the end, what is more important to a country in the long term, curtailing technology like artificial intelligence or even something as vital as grain?
Currently one is an irreplaceable monopoly, while the other is not. One will be vital to the wealth of countries and their economies, while the other is fungible.
There is no second place in intelligence and there is no natural limit for demand.
That is the key idea.
AI will create artificially more powerful nations which will dominate the also rans. Spears versus rifles is not a strategy for the weak, nor is begging to the likes of Trump. Macron has made that plain and you can be sure the rest of the EU understands this.
So here is the rub.
People are constrained by software
Software is constrained by hardware
Hardware is constrained by energy.
This knocks out Europe in a single shot. Europe has 50% the electricity for 150% of the people than the US. It can’t compete on AI because it doesn’t have the power. The only player with adequate power in the EU and with the ability to grow it fast, is France and what do you know, Softbank just pledged billions to build out AI there.
Meanwhile America has power and space to build out…. But wait. China has x2.5 the electricity already and is building out more capacity like crazy. Its cranking out nuclear power at a fraction of the cost of the west. After all its been doing it full on for decades while US/EU nuclear expertise has been atrophying. It is already building out energy infrastructure like the US is dreaming about and Europe is waking up to. So catching China seems an extremely tall task.
So the US advantage is: chips and software, but that moat is eroding fast. It has funding… maybe, but the US has runaway deficits, fractured politics and a resistance to AI by neo-luddites, all of which are not in evidence or tolerated in China. The idea is the US advantages are enough to keep the US ahead. Yet technology moves way faster than infrastructure, so while the technology moat can vanish in months, the energy gap may never be closed in a political system where a rare bird nesting can indefinitely stop a power station from being built.
Musk talks robots, China sells them, here today, and they don’t stagger around an office, they do Kung-Fu.
China can and will fill in US’s software and hardware moat, can the US fill in the China energy moat?
Macron was saying they have spend $600m for the Mistral AI, meanwhile the US has spent $600bn on AI. He believes its amazing a (un)competitive investment as small as 0.1%, has done so well, but he realises it is not sustainable for the sovereignty of Europe to be at the back of the Peloton of AI.
I can develop this analysis in two ways from here.
America cannot build enough energy fast enough and is finished.
or
There will be a simply titanic build out of energy in the US and Europe to catch up with China.
Version 1 is a lot more commercial for me, people love the doom but…..
I think we will see a giant pivot towards energy.
It is coming very soon and if it sputters then we can all select option 1)
However, if it doesn’t, then the economic consequences are huge, with wild growth, high inflation and a secular jump in economic and political volatility for years to come.
Energy is the key to our futures and they are bright is we choose AI over NS.
NS?
Natural stupidity, and sadly there is not shortage of that.